S.O.S. to SMS: Are You Still Alive?

Written by William I. Rothbard on Tuesday, November 5th, 2013

Unless you’ve been on an extended overseas vacation, you’ve probably heard about the stringent new Federal Communication Commission (FCC) telemarketing rule under the Telephone Consumer Protection Act (TCPA) that took effect on Oct. 16 – just in time for the FCC to return from the government shutdown to enforce it, with plenty of help from class action attorneys picturing future luxury vacations of their own.

In particular, you’ve heard about the central feature of the new rule that some feel poses an “existential” threat to mobile telemarketing: the requirement for “prior express written consent.” This means a signed written agreement (E-signature permitted) clearly authorizing contact from a “seller” using an auto-dialer or artificial or prerecorded voice to a cell phone number designated by the consumer. The agreement must disclose that the communication will be made using an auto-dialer or artificial or prerecorded voice and that consenting is not a condition of purchase.
The rule does not “grandfather” in consumers who orally consented before, which means that marketers now have to obtain this consent from them as well as all other consumers before calling or texting them. It may be feasible for marketers to try to do this with consumers whose cell numbers and E-mail addresses they already have – they can simply beam them the written agreement prescribed by the rule and hope they sign. They also, of course, can seek consent in the required manner on their websites and those of their affiliates.

How in the world, though, will companies be able to comply with the written consent requirement for consumers with whom they’ve had no previous contact and whose numbers they obtain in the thousands from list brokers, marketing partners, and the like? While these consumers may have consented in some earlier fashion to be contacted by a third-party marketer, will that marketer now be required to obtain each of those consumers’ signed written consents before transmitting an offer via call or text? The answer to this question – and the continuing viability of mobile telemarketing – may depend on the breadth of meaning given to the term “seller” in the FCC rule’s definition of “prior express written consent.”

Will “seller” be interpreted to mean a seller who must obtain consent from the consumer directly, i.e., the consumer’s signed written consent must be given to that seller, or an agent of that seller? Or will it mean a seller who has permission to call or text a consumer because the consumer has given written consent to someone to receive calls and texts from other sellers? If the former, then it is difficult to see how mobile telemarketing can survive on a mass scale, compliantly at least, in the new regulatory environment.

A clue to how the FCC interprets “seller” can be found in its commentary on the rule, and it is not favorable to a broad reading. It states:

“… A consumer’s written consent to receive telemarketing robocalls must be signed and be sufficient to show that the consumer: (1) Received “clear and conspicuous disclosure” of the consequences of providing the requested consent, i.e., that the consumer will receive future calls that deliver prerecorded messages by or on behalf of a specific seller …”

The limitation of consent to receiving prerecorded messages from a “specific seller” is modeled on the Federal Trade Commission’s (FTC) Telemarketing Sales Rule (TSR), which imposes a prior express written consent requirement on prerecorded messages only (true as well for calls to residential lines under the FCC rule). Does the restriction of the “specific seller” reference to prerecorded calls in this passage mean that the FCC intends a looser treatment of live robocalls and texts, under which a consumer’s signed written consent to receive such communications from third-party marketers could constitute “prior express written consent”? Probably not, since regulatory agencies have a known tendency to give their edicts expansive reach.

Should that view prevail, though? Why shouldn’t consumers be able to knowingly consent in writing to receive calls and texts from third-party marketers, especially when they have the right, as provided by the rule, to opt out at any time?

Ultimately, the courts will decide this and other questions raised by the FCC’s new regulation. In the balance will hang the future of the “text” as a consumer marketing device.